ICAP, part of interdealer broker, TP ICAP, has launched a European special situations desk as the firm sees an opportunity to serve the buy side in the equities market.
Last year ICAP hired Corey Davide from Bloomberg Tradebook as European head of electronic trading to launch a global equity electronic trading offering.
Davide told Markets Media: “ICAP has traditionally been focused on the sell side as an inter-dealer broker. The firm has previously tried to serve the buy side in equities but has decided there is now an opportunity to grow in the space.”
Last month ICAP announced the launch of a European special situations desk to work alongside the US team that has been headed by Humeyra Nicolas since 2008.
“Launching a special situations desk was part of our five-year strategy from day one,” said Davide. “It is a niche segment of the market and provides our clients another service in addition to algorithms and direct market access.”
The five-year strategy includes adding headcount and investing in technology. Davide continued that the equities business is building a global footprint and currently has a team of 12 experienced individuals split equally between London, Hong Kong and the US.
“With this global footprint the team will aim to provide a central service desk for multiple asset classes, not just equities,” said Davide.
Nicolas Breteau, chief executive of TP ICAP, said in a statement that the results today mark an important inflexion point for the group as it has completed the three-year integration programme of the ICAP business that was acquired at the end of 2016.
TP ICAP reported that group revenue grew 4% to £1,833m while underlying and reported operating profitability improved.
Special situations desk
The European special situations team is led by Meb Namajee who previously worked at Citadel, Lehman Brothers and Kepler Cheuvreux. The desk will identify and support trading activity in stocks involved in special situations, including mergers and acquisitions and rights issues.
Namajee told Markets Media: “In Europe there is cash on the sidelines, from the buy side and private equity, waiting for the right environment for mergers. European companies are relatively cheap compared to the US and the UK even more so.”
ICAP has access to more than 60 primary exchanges and more than 40 dark pools to find liquidity and execute trades. In addition, the firm believes it can gain share though providing a specialist service.
“In event-driven equities clients need someone who can provide daily commentary, monitor timelines and inform them of relevant issues affecting deals,” Namajee added.
He continued that ICAP is building a bespoke pairs platform within six months which would enable the firm to capture customers’ spreads, even those with foreign exchange hedging required.
In the foreign exchange market TP ICAP has launched FXOhub, a foreign exchange options platform.
The firm said the new platform differentiates itself by offering a quick and easy view of each currency pair’s supported strategies, and is fully customisable so that each trader can design their own preferred setup.
Paul Dunkley, senior managing director of TP ICAP, said in a statement: “It is an industry leading platform which we are confident will be very popular due to its innovative features and intuitive ease of use.”
Front end users will be able to electronically execute in request for quote mid-pricing auctions on screen, and have the ability to submit runs of orders on TP ICAP’s Order Book on over 250 supported currency pairs. The Order Book allows users to enter their orders quickly and efficiently through multiple methods.
Breteau said: “We also spent last year strengthening our management team, enhancing our risk framework and developing our growth strategy based on aggregation, electronification and diversification. We have a powerful market position in global broking and three exciting growth businesses which we aim to develop strongly in the coming years.”
He continued that the overall macroeconomic backdrop remains uncertain largely due to the Covid-19 virus, slower global growth and the ongoing Brexit negotiations.
“While this environment impacts our clients’ activity, the resulting volatility also creates market opportunities that gives us confidence for the future,” added Breteau.